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Overdrive February 2019

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Overdrive
| February 2019
Despite rising concern about the U.S.
economy's footing, the fundamentals
for freight demand in 2019 remain
mostly positive, said FTR analysts in
early January.
Speaking in a webinar, Avery Vise
and Eric Starks said they expect
freight movement to remain healthy
in 2019, though the economy's
growth will continue to slow from the
surge seen in late 2017 and the first
half of 2018. "We expect a growing
transportation sector in 2019," said
Vise. "Not explosive by any stretch.
We will really just be moving back
toward a normal market."
Major freight-producing sectors
such as manufacturing and construc-
tion remain stable, as do broader
economic indicators such as employ-
ment and retail spending, they said.
"We don't anticipate a significant
pullback from 2018" freight demand,
said Starks. "The key freight drivers
remain fundamentally strong, even if
growth does start to abate."
The stock market's volatile swings
in December and January made "peo-
ple jumpy," said Starks, but "the stock
market is not the economy."
The freight market hasn't seen the
stock market's volatility, Vise said,
and instead has continued to grow
steadily. "However, late in [the sec-
ond quarter], we saw loadings flatten
out," he said, which took pressure off
capacity and could point to greater
volatility in store for 2019.
Truck orders fell sharply at the end
of 2018 after setting records in the
second and third quarters, though
that's likely not a major cause for
concern, says Vise. "The drop in
truck orders says as much about the
constraints of truck production as
it does the freight market," he said.
In addition to fleet confidence wan-
ing slightly, truck makers are having
a hard time keeping up with order
demand, resulting in long lead times
for delivery that likely are "discourag-
ing truck orders," Vise says.
Indices measuring the strength of
the manufacturing and construction
sectors remain positive, the pair said,
though they're not as strong as in
recent months. Likewise, indicators
for retail spending, retail inventories,
unemployment and energy pricing
aren't as strong as they were, pointing
to a moderation in the market but
not a recession or downturn.
— James Jaillet
Freight outlook positive despite slowdown
The somewhat dreary latter half of
2018 for many owner-operators led
to the sounding of some optimistic
notes in Overdrive's annual business-
income expectations poll.
At least one commenter was san-
guine for reasons most don't share,
given the electronic logging device
mandate. Quipped "Mikey" under
the poll: "Looking good for me —
ELD-exempt and won't let FMCSA
control me with an ankle monitor."
This year's differential between
those who predict better perfor-
mance and those who anticipate
worse falls in favor of the optimis-
tic. Despite improving spot market
rate performance in latter 2017, in
last year's poll the pessimistic group
was more sizable, probably due to
worries over how the ELD mandate
would affect productivity.
Much of the change in responses
this year reflects expectations of rela-
tive income stability. Depending on
your recent income, that could be
good news — and you could well be
correct. While late 2018 definitely
presented a mixed bag for owner-
operators depending on freight niche,
economists see the probability of a
full-blown economic downturn as
generally unlikely this year.
— Todd Dills
Owner-operator outlook
more optimistic this year
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Owner-operators: How do
you expect business income
to trend in 2019?
Better
than 2018
31%
Worse
than 2018
23%
About
the same
23%
Not sure
23%